1 Poverty risk in a metropolitan area The households’ condition in Milan Drs. Anna Manzoni Socrates intensive program 2006

2 Recent modifications in the social security system proliferation of researches in the pension sphere Mainly focused on considerations about financial sustainability Apparently the most alarming element of the crisis of contemporary welfare

3 BUT the welfare is involved in a deeper crisis: Incongruence syndrome: Social protection programmes have lost their original tuning with the context and a difference has opened between the traditionally protected risks and the range of new needs (Ferrera, 1998) Disjuncture between existent institutional arrangements and the emerging risk profile (Esping Andersen, 1999: 146) Analysis on the impact of Italian pension system on income distribution: new poverty risks

4 Pensioners in Milan Milanese context: overall framework for pensioners “better” than at the national level (more IVS pensions –the “best”, and higher average amount) Source: survey on poverty in Milan 1505 households 3400 individuals Pensioners are mainly: -women -elderly, but 32% has not reached retirement age -low educated (cohort effect)

5 Household level Italian specificity more multigenerational structure of the family, less “lone elderly” and not trifling % of couples with children (important for the redistributive function of the family) More than 50% of the households = include at least a retiree Of these : 60%= only retirees (of whom 70% single) 15,6% retirees and not-employed (couples and couples with inactive children) 14,6% retirees and employed (couples or lone parents with children in the LM) 10% retirees with employed and not Incomes of all members are pooled Economies of scale Redistribution of resources: Each member reaches the same level of well being

6 Indicator= income data Necessary but not sufficient condition for evaluating the effective well-being Equivalent income =  individual incomes of members / “traditional” Oecd scale coeff. Level of income: Average Y [pensioner households]= 90.5% average Y [all the households] If the breadwinner is: -male -high educated -relatively young Income conditions reflect the overall average Analysis of income conditions

7 Distribution by quintiles Professional condition of the breadwinner Equivalent quintiles of households 12345Total Employed (718) Not employed (105) Retired (743) Total (N=1566)

8 Equivalence scale= “Old” Oecd Threshold = 50% of the median average income Relative poverty

9 Pensioners situation is more favorable than not employed one, and is similar to that of manual employed. Retirees group: extremely variegated. Poverty risks vary a lot within pensioner households social security system reproduces, sometimes widening, LM inequalities

10 Households more at risk: inactive or unemployed (poverty diffusion = 71%) If there is a retiree The risk is reduced to less than 30% (in witness of the giver role of pensioners) Household with exclusively pensioners members: poverty diffusion = 16,9% (over the average) But this is due to the remarkable diffusion of single (poverty: if single = 18,9%; if couple = 13,3%; if other = 6,7%) Household with exclusively employed members: poverty diffusion = 2% If there is a pensioner 1,7% Household members´ position on the LM

11 The further presence of retirees in the household reduces in all the cases the poverty risk Poverty risk in pensioner households is not always higher than the average; it can be lower, both when the breadwinner has certain socio-demographic characteristics, and according to the LM status of other members of the household: living with employed implies –as largely foreseeable- a lower poverty risk, but also living with other retirees involve a risk lower then the average

12 Retirees’ role in the household Average individual income of retired persons > average per capita income (for all the individuals) Givers: individual income > average familial per-capita income Receivers: individual income < average familial per-capita income EmployedNot employedRetiredTotal Givers Neutral contribution Receivers Total (N=3400) More than the 22% of the households receives an economic support from a pensioner (including a pensioner classifiable as giver) >>> pensions= social absorbers: what the effect of a shrinkage in the amount of pensions? Analysis of individual incomes not representative of the effective well-being (because of the economies of scale and of intra-familial redistribution processes)

13 y=1 odds to place below the poverty line Dependent variable (y) y=0 odds to place above the poverty line Binary logistic regression Calculating the poverty risk of different types of households Households mostly affected by poverty are not those with pensioners but rather those recently formed, even if led by an employee, especially if just one works and the children are minor or, however, still inactive

14 Binary logistic regression model for the analysis of poverty risk

15 Economic difficulties are not closely related to age and types of income, but rather on the ratio beneficiaries/members From the regression model: Particularly difficult situation of couples with children -especially minor- The presence of pensioners in the household does not imply a greater poverty risk Pensioners’s situation is problematic only when one single income from pension is present But this is rarely the case

16 Having minor children is linked to a much higher poverty risk Couples with minor children have a poverty risk 3.3 times higher than couples with no children and 10 times higher than singles Family trap: difficulties encountered by women in conciliating domestic chores and family responsibilities Leads to a considerable diffusion of single income households>great poverty risk

17 Make the situation of households headed by working age individuals more difficult Insurance welfare regime, based on status maintenance - Over-protects of old age risk (even if in iniquitous way) - Under-protects new social risks (resulting from the new forms of regulation of the LM and from the crisis of the family) The flexibility and uncertainty created by the LM and the lesser steadiness of the family are among the main causes of the contemporary crisis of the welfare state, whose institutional organization clashes with the new social risks, having been built in the post war period to deal with the risks structure of that period Family instability & difficulties in entering in the LM

18 Ineffective welfare system Italian social security system due to his extreme generosity has estinguished every form of support towards young households Built according to a different risk structure But now: nor LM nor family are able to provide for the well being of the central age classes New marginal strata, new social risks

19 Having children: Less employment rates for women Higher poverty risk for the household Single income family (single male breadwinner model) face considerable poverty risks The presence of children makes these risks even higher In Italy: this family structure is particularly widespread The concrete difficulties encountered by women in combining family responsibilities and work limit the diffusion of households in which both spouses work

20 - Do you think there are also differences at the local level within each countries? Think about differences between city and countryside - Which are the new risks and how should the welfare adapt to them? - What are the consequences of the economic difficulties faced by young couples? Are these equal in all the countries? What do they depend on? - How could the presence of childcare facilities affect poverty in (younger) households? - What about the diffusion of the different family structure in your country? Reflect on different social risks in different countries according to the different social structure of the family